Gold Technicals – 1,385 Support Threatened

Gold prices pushed consistently lower yesterday, with price unable to hold on to the highs forged on Tuesday, a rally that was brought about by the increased likelihood of a Syrian military conflict. However, despite the green light given by the Senate Foreign Relations Committee for Obama to carry out military action on Syria, price did not push up significantly much. The only bullish activity seen yesterday was the push from 1,385 to 1,395 post New York midday, and that seems to be more technically driven with 1,385 the swing low of Tuesday supporting prices. The fact that price has found support from 1,385 yet again is good evidence that we are indeed under strong technical influence right now.

Hourly Chart

From a pure technical perspective, short-term trend is pointing lower with the decline from last Wednesday still in effect. Hence, a bearish target for the decline since Wednesday (Tuesday afternoon EDT) would be 1,375, the swing low of Monday at the minimum. If bearish momentum continues, we could easily see prices breaking below the aforementioned level for a push back towards 1,330-1,345 region (support zone of Weekly Chart). That being said, it is still possible for price to move back towards 1,395 ceiling as Stochastic readings is still technically within a “bull cycle”. Even though readings are pointing lower after crossing the Signal line, current peak did not come from the Overbought region, but from a level where recent peaks have been spotted. Generally this would have been a good substantiation in favor of a bear cycle, but it should be noted that latest 2 peaks formed around this level failed to produce strong bearish follow-through, and as such we should be wary this time round as well.

Weekly Chart

From the weekly chart we can see the formation of a proper bearish rejection from the higher Channel. However, the week is still young with almost 2 full days of trading remaining. The best bearish scenario will see prices pushing lower for the next 2 days, with next Monday trading accelerating lower faster for a confirmation of a return of bearish impetus. This would open up a move back towards the low 1,200s and potentially allow us to break the 2013 low for a bearish extension.

Yesterday we suggested that Gold prices may stay mute regardless the result of this month’s FOMC decision, based on how prices barely traded lower while Treasuries tanked on taper fears. It seems that Syrian unrest is also no longer impacting Gold as much, and even if a US manufactured bomb gets dropped in Syria, we may not see Gold pushing up high as well. The previous made assertion that Gold may able to move towards 1,530 on Syria may be invalidated, which reduces the only bullish driver moving forward solely on the shoulders of Hedge Funds speculative flow. Considering that this speculative bullish flow has had trouble clearing 1,400 in the past, the odds of further bullish advancement does not look good moving forward, in line with what technicals are telling us right now.

More Links:
AUD/USD – Moves Strongly to Two Week High just shy of 0.92
EUR/USD – Rallies back to Key 1.32 Level
GBP/USD – Pressure Prevails as it Surges through 1.56

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